Why Traditional Risk Methodologies are One Step Behind the Real World

Aug 01, 16 Why Traditional Risk Methodologies are One Step Behind the Real World

By Mike Hatcliffe

Here’s the headline from the front page of the Chicago Tribune’s section on Sunday July 3rd: ‘POLITICAL CUBICLES: Taboo on elections as workplace topic may be fading but gray areas remain’.

The story under the headline talks to the changing and noisy political times that have descended on the U.S. during the run up to the Presidential election in November. One of the consequences is that the old adage of “don’t talk politics in the workplace” is breaking apart.

As the writer notes:

‘Traditional taboos against discussing politics at work may be outdated in an age when social media platforms – far more popular than even four years ago – have people sharing political views around the clock.’

However, when discussing politics in the workplace, such is the nature of the debate in this election, you are also bringing incendiary topics such as race, sexual identity, gun ownership and immigration into the office, factory or store.

All of these are complex debates which have the power to create tension, confrontation and upset, leading to unwelcomed behaviors and even violence.

This is a good example of the new form of risk that organizations are facing—risks that are emerging from social, cultural, political and population shifts and which are not necessarily identified by traditional risk methodologies.

Let’s look at how a leading global firm of consultants is talking about the nature of risk. One leading firm spotlighted what it considered to be the key risk management issues for 2016 in a press release in January. The seven that made the list were:

  • Technology Risk Management
  • Third Party Risk Management
  • Fraud and Misconduct
  • Crisis Management
  • Data Security
  • Achieving Compliance Program Effectiveness
  • Improving Risk Data Aggregation and Reporting

All are well worthy of concern and planning. However, there is nothing on the list—and the rigid approach of most consulting firms—that suggests the methodology is dynamic enough to reflect the evolving nature of risk.

The Chicago Tribune’s reporting vividly illustrates with one small example that a new, more fluid and responsive approach to identifying and managing organizational risk is needed urgently.

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